Microsoft could soon be facing multi-million euro fines and other sanctions for breaking European competition law.

The European Commission has finished drafting its decision in the case it brought against the software giant.

The Commission is likely to decide that the firm illegally tied audio and video software, as well as server systems, to its Windows operating system.

While continuing talks with Microsoft, it is now circulating the decision to the parties involved.

"There is a draft on the table and this should come as no surprise, after all the investigation has been going on for long enough," said Amelia Torres, spokeswoman for Competition Commissioner Mario Monti.

"The final stage was the hearing in November and now we have to conclude."

US case

Although the draft has yet to be revealed, few observers think Microsoft will come off unscathed.

The company has already been found by a US court to have broken anti-trust rules, and is now operating under a set of restrictions imposed as part of a deal with the Justice Department.

But the restrictions have been criticised as too lax, and the judge who presided over their resolution said last week they had - at least in part - failed to open up the market for computer software.

The EU is likely to want to go further.

Penalties

According to the Financial Times, the EU will want to fine Microsoft heavily, and may demand that it stops forcing suppliers to include its own media software at the expense of competitors such as Real Networks and Apple.

It is also probable that the company will be forced to reveal more information to its competitors about how its operating system interacts with others and with software applications.

The FT says the decision should be released by 1 May.

The growing market for downloadable music is making the question of Microsoft's alleged attempts to tie its users to its own standards more urgent.